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One of the largest economies in Latin America, Argentina is currently undergoing an economic transformation that promotes sustainable economic development with social inclusion and integration into the global economy.

Overview

With a Gross Domestic Product (GDP) of more than US$628 billion, Argentina is one of the largest economies in Latin America.

Argentina has vast natural resources in energy and agriculture. Within its 2.8 million square kilometers of territory, Argentina is endowed with extraordinary fertile lands and has great potential for renewable energy. It is a leading food producer with large-scale agricultural and livestock industries. In addition, Argentina has significant opportunities in some manufacturing subsectors, and innovative services in high tech industries.

Argentina was the top performer in the region in reducing poverty and boosting shared prosperity between 2004 and 2008. Incomes of the bottom 40% grew at an annualized rate of 11.8% compared to average income growth of 7.6%. This trend continued but slowed after 2008. In the first half of 2018, according to official statistics, 27.3% lived in poverty, while 4.9% were in extreme poverty.

The country prioritized social spending through various programs, including the Universal Child Allowance, which reaches approximately 4 million children and adolescents up to age 18, 9.3% of the population.

Presidential elections at the end of 2015 led to a significant change in Argentine economic policy. The new administration has moved with significant speed to implement core reforms such as the unification of the exchange rate, the agreement with international creditors, the modernization of the import regime, reduction of inflation and reform of national statistics system.

In addition, Argentina has taken a very active role on the international stage and is in charge of the presidency of the G20 in 2018, expressed intention to join the OECD and became an observer in the Pacific Alliance.

After an economic growth of 2.9% in 2017, the country is facing a financial turmoil in 2018. Economic activity began to slow down in the second quarter of 2018 and the year is expected to end with a recession. The Argentine peso has suffered a depreciation since April and fell close to 100% against the dollar so far this year. As a result, inflation accelerated since June and is expected to accelerate more during the year.

This situation led the Government to launch a new economic program that includes a budget cut, an increase in revenues, and a US$57 billion agreement with the International Monetary Fund (IMF) until 2021. until 2021.

In this context, the Government exceeded its fiscal objectives for the first half of 2018. The primary fiscal deficit reached 1.1% of GDP in the first eight months of 2018, and it is expected to reach the target of 2.7% of the GDP for 2018. The Government plans to achieve the primary fiscal balance by 2019 and a primary fiscal surplus of 1% by 2020.

lastupdated: Oct 10, 2018

The WBG strategy is built around three broad themes:

(a) sustained employment creation in farms and firms

(b) improving availability of assets for people and households

(c) reducing environmental risks and safeguarding natural resources

These thematic areas were selected for their contribution to achieving sustained poverty reduction and shared prosperity.

Some emblematic programs will contribute to reduce average transit time to city centers from poor neighborhoods in two metropolitan areas by 15%; or to increase by 12% the gross value of agricultural production ($/ha) of 80,000 small and medium-size farms in lower-income areas; and will support an increase in effective national healthcare coverage from 28% to 50%.

The strategy focuses on working with the country’s poorest provinces and in large urban areas. There will be support for programs designed to increase the employability of young people through training, apprentice programs and corporate partnerships. In large cities, the strategy will promote activities that include logistics solutions, urban transport, basic services, skills development and governance in communities and low-income municipalities.

lastupdated: Oct 10, 2018

Argentina currently has a portfolio of 25 investment projects with US$6.4 billion in committed loans, two guarantees of US$730 million, and three grants totaling US$10 million. The portfolio concentrates on programs in health, environment, education, infrastructure, the labor market and social protection.

In the framework of the strategy, the Board of Directors approved this year 3 projects and a guarantee totaling US$1 billion.

About 900 thousand inhabitants of northwestern Argentina will benefit from road connectivity improvements thanks to the Northwest Development Road Corridor Project (US$300 million) and will have access to improved water supply and sanitation services thanks to Plan Belgrano (US$125 million).

At the urban level, two projects aim to improve basic services in disadvantaged neighborhoods and improve access to formal housing throughout the country. The US$200 million Integrated Habitat and Housing Project is supporting the first national housing subsidy program (Línea Solución Casa Propia). Simultaneously, it will seek to improve living conditions in informal settlements through better infrastructure, public services and social programs. The US$200 million Urban Transformation Project in the Buenos Aires Metropolitan Area seeks better housing conditions and access to basic services and infrastructure in disadvantaged neighborhoods of the Buenos Aires Metropolitan Area (such as Villa 31 in the City of Buenos Aires).

More than 600,000 public transport users in the Metropolitan Area of ​​Buenos Aires will benefit from additional funding of US$45 million for the Metropolitan Areas Urban Transport Project (PTUMA), which is financing a new bus corridor (Metrobus) in the province of Buenos Aires and a transfer center in the south of the City of Buenos Aires.

In order to get 20 percent of Argentina's energy from clean sources by 2025, a US$480 million guarantee was put in place to support the Fund for the Development of Renewable Energies (FODER). The development of renewable energy in Argentina is key to diversify the energy matrix and contribute to climate change mitigation.

The World Bank is also carrying out a number of analytical studies to help achieve sustained poverty reduction in Argentina. The latest reports focus on topics such as agriculture, environment, pensions, subsidies, and cities, among others.